DWP savings rules for Universal Credit see thousands have benefits stopped

05 March 2024 , 13:19

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The DWP is currently moving people who claim legacy benefits such as Tax Credits over to Universal Credit (Image: Getty Images/Image Source)

Thousands have had their benefits stopped because they didn't move over to Universal Credit due to its savings rules.

The Department for Work and Pensions (DWP) is currently moving those claiming Tax Credits and other legacy benefits over to Universal Credit through Managed Migration. If you receive a "Managed Migration notice - you have three months to put in a claim for Universal Credit. If you don't, you have your benefit payment stopped.

Official figures recently revealed that 31,500 had their benefits stopped for failing to put in a new claim. According to the DWP, one of the reasons for this was down to the rules regarding savings for Universal Credit - even though the rules for Universal Credit would not be enforced until after 12 months.

Under Universal Credit rules, your payments are impacted if you have £6,000 in savings and they are stopped if you have savings worth £16,000. However for Tax Credits, according to charity Scope, the savings limit of £16,000 does not exist and what you're entitled to is based on your income last year, which includes interest on any savings.

The DWP's research revealed that even though claimants knew of the 12 month exemption for the rules, they still decided not to claim as they believed they would not be eligible for the benefit.

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Other reasons for not claiming were down to a change in the circumstances of the claimant, Universal Credit payments being too low, and the self-employment rules for the benefit.

Respondents to the DWPS research said they had their income rise recently and believed it would cancel out their Universal Credit payments. Others said believed their Universal Credit payments would be too low and it was not worthwhile to make a claim. If you are self employed and claiming Universal Credit then the rules around reporting your monthly income are stricter. This includes reporting business records and alongside your earnings. Again, this extra monitoring is a suggested factor to why people did not make a claim.

Commenting on the findings, the National Audit Office said: "The main issue arising to date relates to the proportion of Tax Credit claimants not applying for Universal Credit. DWP needs more positive assurance that those claimants who do not transfer to Universal Credit, who may be at risk of financial hardship, are receiving the benefits they are entitled to."

Ruby Flanagan